On Friday December 23, 2011, President Obama signed the two month extension of the payroll tax cut. This bill extends the following through February 20, 2012.
- The 2 percentage point cut in Social Security payroll tax. Thus the employee’s social security tax rate will remain at 4.2%. The employer’s share will remain at 6.2%
- It renews benefits for the long-term unemployed at current levels.
- Prevents 27 percent cut in Medicare payments to doctors and extends other health care fees.
Payroll departments can breathe a sigh of relief since this agreement also called for new language to be inserted into the bill preventing a potential payroll processing nightmare. It eliminated the proposal to limit the tax cut to anyone earning over $110,100 to 1/6 of the annual tax cut.
2012 will certainly be an interesting year as far as payroll administrative changes are concerned. So stay tuned as we will continue to keep you updated. If you have any questions concerning payroll related items please contact Debi Kern or Debbie Pitt at 610-565-3930.
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